5 Important Factors To Consider While Buying Health Insurance
How can you decide whether a plan is worth it, or not? Here are five important features to consider while making your buying decision
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As lifestyle diseases gather pace, and healthcare costs escalate, the relevance of adequate Health Insurance to one's Financial Plan is on a steady rise. With it, come more players with new "innovative" products with enough features and jargon to make a layperson's head spin! As smart savers look beyond company provided Mediclaim plans, they often discover, to their consternation, that it's nearly impossible to trawl through the complex web of product features and fine print that these product brochures contain. How can you decide whether a plan is worth it, or not? Here are five important features to consider while making your buying decision.
Remember, price and product quality are not necessarily correlated when it comes to Health Insurance. Pricing, for a Health Insurer, is an enterprise level decision that (among other things) will be contingent upon the underwriting efficiency and operational efficiency of the insurer itself. Take, for instance, a family floater plan for 2 adults and 2 children for a 10 Lakh Sum Insured (assuming the eldest person to be 35 years of age). The annual premium for ICICI Lombard's Complete Health Insurance works out to Rs 17,128 - whereas the premium for L&T General's Medisure Prime works out to Rs 32,649! Be sure to compare prices for the same sum insured across at least five insurers on their online portals, to be certain that you're not getting a raw deal.
Incurred Claims Ratio
Once you're fairly certain that the price you're paying isn't exorbitant, check out the Incurred Claims Ratio or ICR of the Insurer on the IRDAI website. The ICR is calculated as the total value of the claims paid, divided by the total value of the premiums mobilized by an insurer. An ideal ICR would range from 50% to 80%, as too high a figure would indicate that the business is bleeding, and the management may decide to clamp down on claims in the next year to stem the rot. A figure below 50% may indicate an uncomfortably high chance of your claim getting dishonoured during your time of need.
Co-payment implies that you'll be required to foot a portion of the hospital bill yourself. Similar to co-payment is the 'voluntary deduction' feature, which can be opted for at the time of taking on the policy. The quantum of co-payment typically ranges from 0% to 10%. You'd ideally want to buy a plan that requires no co-payment at all. In fact, do not be penny wise, pound foolish by opting for a cheaper policy, or policy version, that requires you to co-pay.
You'll want to go through the list of "exclusions" carefully. While all plans will exclude treatment costs for pre-existing conditions (say, diabetes or heart disease) for a certain period of time, this time frame itself will vary from 1 year to 4 years. You'd want this time period to be as short as possible - preferably one to two years, and certainly not more. Besides the exclusions for pre-existing conditions, some policies may exclude any and all hospitalization expenses for a certain period of time. While a zero lag is preferred, a thirty-day lag is acceptable - anything more is a deal breaker.
Waiting Period for Diseases
Some policies will require a waiting period for the treatment of a fixed set of diseases. These could be dialysis, gastric ulcers or cataract, for instance. Ideally, you'd want a policy with no waiting period - this is a big plus point.
Other features such as restoration benefit, wellness and 'no health check-up requirement' are worthy of consideration too, but not quite as much as the above stated five. For instance - your buying decision should be less contingent upon the convenience arising from not having to step out for a medical test, and more upon the policy actually smoothly indemnifying you in a time of dire need! Weed out the cosmetic 'marketing' features and focus on the price, ICR, co-payment, exclusions and waiting period and you'll be making a smart move in the right direction.